2nd Aug 2006 10:05
Hammerson PLC02 August 2006 Retail Warehouse Portfolio Acquisition Hammerson plc has exchanged contracts to acquire a portfolio of retailwarehouses valued at £425 million through the purchase of LxB Holdings Limited,a property company specialising in out-of-town retail property. Each of theproperties has an open A1 planning consent. Hammerson will purchase the shares in LxB Holdings Limited and repay shareholderloans to the company for a total of £199 million. Of this amount, £26 millionwill be satisfied by the issue of loan notes to one of the vendors and thebalance from the group's existing resources. The portfolio provides a combined floorspace of 1.25 million ft(2) (116,000 m(2)) and currently generates rents of £16.1 million per annum, an average of£13.90 per ft(2). The current ERV of the portfolio is £19.4 million equivalentto £16.50 per ft(2). This compares favourably with the average ERV of £23.70 perft(2) for comparable UK retail park floorspace. In addition, there are excellentopportunities to extend and redevelop the schemes to increase the floorspace andenhance rental values. Hammerson anticipates that these developments couldinvolve further expenditure totalling £200 million over the next five years. The portfolio comprises the following properties: - Manor Walks, Cramlington, Newcastle; - Abbey Retail Park, Newtownabbey, Belfast; - The Orchard Centre, Didcot; - Seacourt Retail Park, Oxford; - a 50% interest in Parc Tawe Phase 1, Swansea. The vendors are Bank of Scotland Corporate, West Coast Capital (Retail Parks)Limited, BG Holding EHF and a group of management shareholders. John Richards, Chief Executive of Hammerson plc, said: "This acquisition substantially increases Hammerson's critical mass in theretail parks sector and extends the group's development pipeline for retailwarehousing. The parks in this portfolio all benefit from open A1 consents andprovide a platform for good rental growth. Retailer demand for well configuredretail park space remains strong and we believe such schemes will continue tooutperform. Hammerson has built up a highly successful retail parks business over the pastfour years, including notable development schemes in Gloucester and MerthyrTydfil which are now trading." Hammerson was represented by Strutt & Parker and Herbert Smith. The vendors wererepresented by Clifford Chance. For further information: John Richards, Chief Executive, Hammerson plc Tel: 020 7887 1000 Chris Smith, Director of Corporate Affairs, Hammerson plc Tel: 020 7887 1019 [email protected] Notes to Editors 1) Manor Walks, Cramlington, near Newcastle Manor Walks Shopping Centre and the adjoining Westmorland Retail Park, whichform the core retail area of Cramlington are situated nine miles north ofNewcastle. In total the scheme currently extends to circa 45,700 m(2). ManorWalks is an enclosed scheme, which links into the Westmorland Retail Park.Principal tenants include Sainsbury, Asda and Next. The covered mall iscurrently let at rents of circa £65 per ft(2) Zone A. The retail park is let atrents of less than £15 per ft(2). Although the park has an open A1 planning consent, the majority of tenants arebulky goods retailers. There is an opportunity to introduce additional highstreet retailers to the park. Overall, the scheme has significant developmentpotential to increase the scale of the food offer and add units suited to largerspace users, including potentially a new anchor store. 2) Abbey Retail Park, Newtownabbey, Belfast The scheme is located approximately three miles north of Belfast city centre inan established retail destination adjacent to a new flagship Marks & Spencerstore. The scheme consists of two phases totalling 23,400 m(2). The majority ofthe park benefits from open A1 consent. The scheme, which is anchored by Tescoand B&Q, is currently let to six tenants at rents between £10 per ft(2) and£17.50 per ft(2). The property was developed in two phases, which are currently not connected.Development proposals have been prepared to integrate both phases of the scheme,create new retail warehouse units and extend some existing stores. 3) The Orchard Centre, Didcot The Orchard Centre provides the main retail offer for Didcot, 14 miles south ofOxford. It comprises 22,000 m(2) of open A1 retail accommodation set out as apart open mall, part retail park and anchored by a Sainsbury food store. Primerents in the mall are £50 ft(2) Zone A. The retail warehouse units are let ataverage rents of approximately £15 per ft(2). There is the potential fordevelopment of over 10,000 m(2) of open A1 retail warehousing and residentialaccommodation on an adjacent site. 4) Seacourt, Retail Park, Oxford The Seacourt Retail Park is located to the south of Oxford on the Botley Road,one of the main arterial routes into the city. The area is an established retailwarehouse location with a number of bulky goods parks in the area. The schemeconsists of 7,700 m(2) of retail accommodation benefiting from open A1 consentand a small office building of 2,300 m(2). Although the scheme has an open consent, the majority of occupiers are bulkygoods retailers. Rents currently average £22 per ft(2). There is potential for amajor refurbishment and reconfiguration of the space to enhance returns. 5) Parc Tawe Phase 1, Swansea Parc Tawe retail park is an edge-of-city-centre scheme in Swansea. Phase 1 ofthe scheme extends to 19,900 m(2) and incorporates 5,500 m(2) of leisure uses,including a cinema. The retail warehousing benefits from open A1 consent. Theretail park is let at rents of less than £12 per ft(2). The property is held in a 50:50 joint venture with Land Securities. There ispotential for a mixed-use development incorporating a food store, retailwarehousing and leisure. 6) LxB Holdings Limited LxB Holdings Limited was incorporated on 26 May 2005. The company commencedtrading on 29 June 2005. The only financial statements published by the companycover the period from incorporation until 31 December 2005. The results forthis period, which have been prepared under UK GAAP, show a loss on ordinaryactivities after tax of £2.6 million. In addition, the financial statementsinclude a revaluation surplus of £13.3 million arising from the company'sinvestment properties and its investment in Swansea during the same period. 7) Acquisition Structure The acquisition of this portfolio has been structured as the purchase of theshares of LxB Holdings Limited and its subsidiary companies. The acquisitionprice has been agreed at a property value of £425 million, less £15 million fortax and a deduction of other net liabilities at book value. Acquisition fees areestimated at £3 million and stamp duty on the shares acquired will beapproximately £0.5 million. None of LxB's directors or staff will be joiningHammerson. 8) Rental analysis Current average ERVs at UK retail parks with a substantial high street presenceare estimated at £23.70 per ft(2) by PMA, based on analysis of figures providedby IPD. 9) Information on Hammerson For further Information on Hammerson and the group's retail parks portfolio,visit www.hammerson.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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